Before the end of 2023, SoftBank may finalize IPO efforts in the US for PayPay and Arm.
Japanese multinational investment holding company SoftBank Group Corp is currently considering a United States initial public offering (IPO) for its PayPay payments subsidiary, according to a Reuters report.
SoftBank is likely considering a New York listing because tech companies mostly achieve impressive valuations in places other than Tokyo. However, Japanese companies conducting IPOs in New York are not very common.
SoftBank has not decided on whether or not to list or set a timeline for the IPO.
In May, SoftBank had expressed a desire for PayPay to list in the US. Recently appointed CEO Junichi Miyakawa said the idea for a PayPay IPO is independence, adding that the listing could happen soon. Nonetheless, the IPO will likely be delayed until PayPay can properly illustrate a clear path toward profitability. PayPay is owned by SoftBank Group and Z Holdings, the holding company that comprises Yahoo! Japan and the Line instant messaging app.
Both SoftBank Group and Z Holdings shares climbed 2% and 6%, respectively. Z Holdings had its largest one-day rise since February, likely on news of the possible listing. While SoftBank is pursuing a foreign listing for the payments company, Astris Advisory Japan analyst Kirk Boodry believes the tech IPO space in Japan is not yet saturated:
“Z Holdings shares reacted on hopes that a US listing might invite a premium valuation but recent domestic listings for Rakuten Bank and SBI Sumishin Net Bank indicate there is room for fintech listings locally.”
SoftBank’s PayPay IPO Joins Possible Arm Listing
In addition to PayPay, SoftBank’s semiconductor company, Arm, is also considering a US IPO in 2023. Arm confirmed it would likely pursue a US-only listing this year, abandoning a rumored UK option. Arm CEO Rene Haas described the US option as “the best way forward for the company and its stakeholders” after discussions with the British Government and the UK’s Financial Conduct Authority fell through.
Back in January, Haas had a meeting with British Prime Minister Rishi Sunak at the Prime Minister’s residence, with SoftBank founder Masayoshi Son present virtually. According to inside sources, the meeting ended positively as Sunak was enthusiastic about the chance of an Arm listing.
SoftBank’s Vision Fund Tanked Last Year
SoftBank may be hoping to improve its books this year with IPO efforts geared at Arm and PayPay. The investment giant’s Vision Fund had an unimpressive 2022, recording a 660 billion Japanese Yen ($5 billion) loss, plus a 730.35 loss on investments for the quarter ended December 31st. Because of the result, Son said the fund would begin “defense” mode and be very cautious about further investments.
For the fiscal year ended March 31st, SoftBank said its Vision Fund lost a record 4.3 trillion yen, about $32 billion. The loss for the year was higher than 2.55 trillion yen sustained for the same period in the previous year. The company said a lot of the losses resulted from heavy decreases in several company investments.